Introduction:
The production possibility curve (PPC) is a graphical representation that shows the different combinations of two goods that an economy can produce using its resources and technology. The PPC assumes that all resources are fully employed, but in reality, there may be unemployment in the economy. The extent of unemployment affects the PPC.

Effect of Unemployment on the PPC:
Unemployment occurs when there are idle resources in the economy, such as labor, capital, and land. When there is unemployment, the economy is not producing at its full capacity, and this affects the PPC in the following ways:

Shifts the PPC Inward:
When there is unemployment, the economy is not using all its resources, and this leads to a decrease in the production capacity of the economy. This, in turn, causes the PPC to shift inward towards the origin, indicating that the economy can produce fewer goods and services.

Decreases the Slope of the PPC:
The slope of the PPC represents the opportunity cost of producing one good in terms of the other. When there is unemployment, the opportunity cost of producing one good decreases since there are idle resources that can be used to produce more of that good without sacrificing the production of the other good. This leads to a decrease in the slope of the PPC, indicating that the opportunity cost of producing one good in terms of the other has decreased.

Conclusion:
In conclusion, unemployment affects the PPC by shifting it inward and decreasing its slope. These effects show that when there is unemployment, the economy is not producing at its full capacity, and this leads to a decrease in the production of goods and services. Therefore, reducing unemployment is essential for maximizing the production capacity of the economy and moving the PPC outwards.

Production Possibility curve refers to various combinations of two goods with the given resources and technology in an economy with fuller utilisation of the given resources in the most effective way. Thus, if there is unemploymentor unefficient use of resources in an economy then the point of PPC will shift below the PPC